Which action is essential to control direct costs?

• A. Implementing price discounts
• B. Reducing insurance claims
• C. Regularly maintaining the fleet
• D. Increasing employee bonuses

Answer: (C)

Controlling direct costs is crucial for maintaining a company's profitability and operational efficiency. Regularly maintaining the fleet is essential because direct costs often include expenses directly tied to the production of goods or services, such as transportation costs. By ensuring that the fleet is well-maintained, a company can minimize unexpected breakdowns and the subsequent costs associated with repairs or disruptions in service. This preventative approach helps in extending the lifespan of vehicles, improving fuel efficiency, and ensuring timely deliveries, all of which contribute to reducing direct operational costs.

In contrast, implementing price discounts and increasing employee bonuses typically impact revenue and compensation strategies rather than directly controlling costs. Reducing insurance claims may indirectly benefit the overall cost structure, but it does not specifically target the control of direct costs the way fleet maintenance does. Proper fleet maintenance directly influences efficiency and cost management, making it a key action in controlling direct costs.